China Security & Surveillance Technology, Inc. Announces Registered Direct Offering and to Repurchase $50 Million Convertible Notes

Oct 02, 2009, 10:00 ET from China Security & Surveillance Technology, Inc.

SHENZHEN, China, Oct. 2 /PRNewswire-Asia-FirstCall/ -- China Security & Surveillance Technology, Inc. ("CSST" or the "Company") (NYSE: CSR; Nasdaq Dubai: CSR), a leading provider of digital surveillance technology in the PRC, today announced that it has entered into definitive agreements with certain accredited investors to sell in a registered direct offering 9.36 million shares of its common stock at a price at $6.25 per share under its Form S-3 Registration Statement resulting in gross proceeds to the Company of $58.5 million, before deducting placement agent fees and expenses of the offering. In addition, the Company has issued to the investors warrants to purchase 2.3 million shares of common stock, in the aggregate, at a price of $8.16 per share for a term of one year. The closing is subject to certain customary closing conditions and is expected to occur early next week.

The net proceeds from the offering will be used to repay the Company's $50 million Tranche A Zero Coupon Guaranteed Senior Unsecured Convertible Notes for a purchase price of $47.5 million, as specified in a non-binding term sheet signed between the Company and Citadel Equity Fund Ltd. Pending such repayments the Company will use the net proceeds from the offering for working capital and general corporate purposes.

Mr. Guoshen Tu, Chief Executive Officer of CSST, commented, "We are very pleased by the strong interest to our offering and to be able to sign the term sheet with Citadel to retire the Tranche A Notes. We believe the combination of these two transactions will further strengthen our balance sheet, create additional cost savings, improve future cash flows, and enhance our capital structure. These ongoing efforts should augment our financial flexibility and help us support our strategic expansion and long term growth."

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any jurisdiction. The shares of common stock may only be offered by means of a prospectus. Copies of the final prospectus supplement and accompanying base prospectus can be obtained from Brean Murray, Carret & Co., LLC (570 Lexington Avenue, 11th Floor, New York, NY 10022, fax +1-212-702- 6548), or from China Security & Surveillance Technology, Inc. (13/F, Shenzhen Special Zone Press Tower, Shennan Road, Futian District, Shenzhen, People's Republic of China, 518034).

Existing Notes Details

On September 2, 2009, the Company restructured its two 1% Guaranteed Senior Unsecured Convertible Notes due 2012 into two new tranches of notes: the Tranche A Zero Coupon Guaranteed Senior Unsecured Convertible Notes (the "Tranche A Notes") and the Tranche B Zero Coupon Guaranteed Senior Unsecured Notes (the "Tranche B Notes").

The Tranche A Notes have a principal amount of $50 million, zero coupon interest, and mature on September 2, 2012. The Company will repay the principal amount in six consecutive semi-annual installments, starting March 2, 2010, with 25%, 25% and 50% of the principal amount to be repaid in the first, second and third year, respectively. The conversion price will be $10.00 per share initially, subject to customary conversion price adjustments, anti- dilution protections and a one-time price reset on March 2, 2011 (the 'Reset Date') based on the volume weighted average price of the Company's shares during the 45 trading days immediately preceding the Reset Date, provided that the conversion price shall be adjusted to no lower than $6.00 per share.

The Tranche B Notes, which are not convertible, have a principal amount of $84 million, zero coupon interest, and mature on September 2, 2012. The Company will repay the principal amount in six consecutive semi-annual installments, starting March 2, 2010, with 46%, 46% and 8% of the principal amount to be repaid in the first, second and third year, respectively.

The Company is entitled to redeem the two tranches of notes at any time with no premium or penalty at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus default interest, if any.

About China Security & Surveillance Technology, Inc.

Based in Shenzhen, China, CSST manufactures, distributes, installs and services surveillance and safety products and systems as well as develops surveillance and safety related software in China. Its customers are mainly comprised of commercial and government entities and non-profit organizations. CSST has built a diversified customer base through its extensive sales and service network that includes over 150 branch offices and distribution points throughout China. To learn more about the Company visit http://www.csst.com .

Safe Harbor Statement

This press release may include certain statements, including without limitation statements concerning the proposed transactions and its impact on our prospects, that are not descriptions of historical facts, but are forward- looking statements. Such statements include, among others, those concerning our expectations regarding the closing of the registered direct offering, those concerning the repurchase of the Tranche A Zero Coupon Guaranteed Senior Unsecured Convertible Notes, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. Forward-looking statements can be identified by the use of forward-looking terminology such as "will," "believes," "expects" or similar expressions. Such information is based upon expectations of our management that were reasonable when made but may prove to be incorrect. All of such assumptions are inherently subject to uncertainties and contingencies beyond our control and based upon premises with respect to future business decisions, which are subject to change. The proposed transaction described in this press release may not proceed as described or at all. We do not undertake to update the forward-looking statements contained in this press release. For a description of the risks and uncertainties that may cause actual results to differ from the forward-looking statements contained in this press release, see our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC"), and our subsequent SEC filings. Copies of filings made with the SEC are available through the SEC's electronic data gathering analysis retrieval system at http://www.sec.gov .

    For more information, please contact:

    Company Contact:
     Terence Yap
     Tel:   +86-755-8351-5634
     Email: ir@csst.com

    Investor Contact:
    ICR:
     Michael Tieu
     Tel:   +86-10-6599-7960
     Email: michael.tieu@icrinc.com

     Bill Zima
     Tel:   +1-203-682-8200
     Email: bill.zima@icrinc.com

    Media Contact:
    Fleishman-Hillard Hong Kong
     Patrick Yu
     Tel:   +852-2530-2577
     Email: patrick.yu@fleishman.com

SOURCE China Security & Surveillance Technology, Inc.



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